St. Paul Saints ballpark bond plan goes before Port Authority

The Gillette manufacturing building, in St. Paul's Lowertown, is being demolished to make way for a 7,000-seat stadium for the St. Paul Saints. (Pioneer Press)

The St. Paul Port Authority board of commissioners will meet Tuesday to discuss its role as the city's bond issuer for the Lowertown ballpark project, a future home for the minor league St. Paul Saints.

Commissioners will be asked to pledge the Port Authority's taxpayer-supported levy as an ultimate backup funding source for up to $10 million in bonds. However, the levy would be relied upon only if all other funding sources were to fail.

Nevertheless, the decision ties up nearly a fourth of the Port Authority's potential taxing authority for more than two decades.

"We are going to ask for an $800,000 increase in our mandatory levy for 25 years," said Tom Collins, a spokesman for the Port Authority. "Each and every year, if the bonds are going fine, we are going to waive that $800,000 levy. The intention is that the Saints repay that through their rents."

The Port now levies $1.7 million annually, which is lumped under "special taxing districts" in the annual property tax statements issued by Ramsey County. That amount won't change, and taxpayers would not see an increase, Collins said, unless a series of backstops falls apart.

The construction cost of the city-owned ball field, once estimated at $54 million, was recently revised upward to $63 million to cover basic construction and environmental cleanup.

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The Port Authority plans to work with the city to obtain grants to cover up to $6 million of the $9 million increase. The Saints have agreed to increase their contribution by $1 million, and the city would use $2 million in sports facilities money from the state to make up the rest.

"The city will assume liability for the gap funding if grants or other sources are not identified prior to the closing on construction financing," states a July 18 memo to the Port Authority's board of commissioners from Laurie Hansen, the agency's chief financial officer.

St. Paul's $17 million bond portion of the project will be issued in two bonds. A $8.5 million bond issue will be repaid using St. Paul's existing -1/2-cent sales tax. The Port Authority will handle the second bond issue of up to $10 million using its annual tax levy as a "credit enhancement" to obtain the highest possible rating and lowest possible interest rate.

Greg Copeland, president of the St. Paul GOP City Committee, said the half-cent sales tax -- recently extended by the Legislature to the year 2042 -- is the wrong funding source for the city's bonding portion. He noted St. Paul residents voted against funding a Minnesota Twins stadium with sales taxes when former Mayor Norm Coleman put the issue on the ballot in 1999.

"Let's go put this thing on the ballot and see what the public wants to spend their money on," Copeland said.

The Port Authority's bond portion would be repaid or secured with five guarantees. The repayment would be taken from rent payments from the Saints, and backed by a one-year debt service guaranteed by the Saints, with a year's payments -- about $650,000 to $800,000 -- placed into a reserve fund as collateral. Another reserve fund, equivalent to a year's payments, would be backed by a bond.

As a fourth guarantee, in a next-to-worst case scenario, the city would work to transfer funds to the Port Authority if the Saints do not make their lease payments, according to Hansen's memo.

In a worst-case scenario, if all other sources have been depleted, the Port Authority would make the payments through the levy.

The bond issue will come back to the Port Authority Board of Commissioners for final approval Aug. 27.

The St. Paul City Council also will be asked to weigh in on the agreement with the Saints and the Port Authority.